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Notes to Accounts of Hikal Ltd.

Mar 31, 2015

1 Company Overview

Hikal Limited ('Hikal' or 'the Company') was incorporated as a public limited Company on July 8, 1988 having its registered office at 717/718, Maker Chamber V Nariman Point, Mumbai 400 021.

The Company is engaged in the manufacturing of various chemical intermediates, specialty chemicals, active pharma ingredients and contract research activities.

The Company is operating in the crop protection and pharmaceuticals space.

2. c. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rd 2 (PY Rs 10) per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March 2015, the amount of per share dividend recognised as distributions to equity shareholders is Rs 1 on a face value of Rs 2 (PY Rs 4.50 on a face value of Rs 10).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3. a. Nature of Security :

b. Term loan from three banks is secured by first pari passu charge on the fixed assets of the Company's plants situated at Taloja, Panoli, Bangalore and R & D Centre at Bangalore and second pari passu charge on entire current assets both present & future.

c. Term loan from one bank is secured by first pari passu charge by way of equitable mortgage on the immovable fixed assets together with buildings and other structures standing thereon including any plant, machinery and fixtures & fittings lying therein located at Company's plants at Panoli, Bangalore,Taloja and R & D Centre at Banglore both present and future.

d. Term loan from one bank is secured by first and exclusive charge by way of mortgage on immovable properties of the Company being land and building situated at Plot no 3A, phase 2, International Biothech Park, Hinjewadi, Pune.

e. Rupee term loan from a financial institution is secured by fixed assets of the Company and shall rank as a first charge over its R & D Unit situated at Bangalore and first pari passu charge on the fixed assets of the Company's plants situated at Bangalore, Panoli and Taloja and second pari passu charge on the current assets of the Company.

f. External commercial borrowing from a financial institution is secured by first charge on the fixed assets of the Company's plants situated at Taloja, Bangalore and Panoli and insurance proceeds (pertaining to the said movable fixed assets and current assets) ranking pari passu with the existing term loan lenders and second pari passu charge with the existing term loan lenders on all current assets of the Company.

g. Term loan from a financial corporation is secured by first and exclusive charge on the office premises of the Company at Nariman Point, Mumbai.

h. Vehicle loans are secured by first charge on the said vehicles.

4. a. Nature of Security and terms of repayment for secured/unsecured borrowings :

b. Working capital loan from IDBI Bank Limited of ' 350 Million are secured by first pari passu charge on entire current assets both present & future and exclusive charge on fixed assets of the Company's plant situated at Mahad.

c. Working capital loan from Standard Chartered Bank are secured by first pari passu charge on entire current assets both present & future and exclusive charge on office premises of the Company at CBD Belapur (Navi Mumbai).

d. Working capital loans from Other banks are secured by first charge on all current assets of the Company and second pari passu charge on all fixed assets both present and future of the Company situated at R&D Unit at Banglore and Company's plants situated at Bangalore, Taloja and Panoli.

b. Working capital loans are repayable on demand and carry interest ranging from 5% to 14.50 % p.a.

c. Inter corporate deposits repayable on demand and carries interest @ 12.5 % to 18 % p.a

5. During the previous year ended 31 March 2014, the Company at its extra ordinary general meeting held on May 17, 2013 decided to cancel / rescind the ESOP Scheme. Consequently, Rs 330.56 million in the trust was received by the Company and accounted as other income in previous year.

6. Capitalization of expenditure

During the year, the Company has capitalized the following expenses of revenue nature to the cost of fixed asset/capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalised by the Company.

7. Segment reporting

The Company's financial reporting is organised into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information.

Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising trade receivables, inventories, fixed assets and loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising trade payables and other liabilities.

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

8. Related Party Disclosures

List of related parties Parties where control exists :

Subsidiary Companies

Hikal International B.V ("HIBV") Acoris Research Limited ("ARL')

Key Management Personnel

Jai Hiremath Chairman and Managing Director Sameer Hiremath President & Joint Managing Director

Relatives of Key Management Personnel

Sugandha Jai Hiremath

Enterprises over which key management personnel and their relatives exercise significant influence

Decent Electronics Private Limited ("DEPL") Marigold Investments Private Limited ("MIPL") Iris Investments Private Limited ("IIPL") Karad Engineering Consultancy Private Limited ("KECPL") Ekdant Investment Private Limited ("EIPL") Shri Rameshwara Investment Private Limited ("RIPL") Shri Badrinath Investment Private Limited ("BIPL") Rushabh Capital Services Private Limited ( "RCSPL")

9. Leases

a) Operating Leases

The Company has taken printers, copiers and office and residential premises under cancellable and non- cancellable operating lease arrangements. Lease rentals debited to the statement of profit and loss aggregates to Rs 3.45 million (PY 2.03 million) for non-cancellable lease and Rs 14.73 million (PY 10.97 million) for cancellable lease.

10. Derivative Instruments

The Group uses derivative and forward contracts to hedge its risks associated with foreign currency fluctuations. Such transactions are governed by the strategy approved by the Board of Directors which provides principles on the use of these instruments consistent with the Company's Risk Management Policy. The Group does not use these contracts for trading or speculative purposes. The Group has marked to market the forward contracts outstanding as at 31 March 2015 which has resulted in a net gain to the Group. The Group has not recognised the resulted gain of Rs 10.27 Million, on prudent basis which is notional in nature. The mark to market loss on Currency/interest swap contracts a3ggregating ' Nil (PY 120.10 million) has been recognized in the statement of profit and loss.

11. Dues relating to Investor Education and Protection Fund

There are no dues, which needs to be credited as at the year end to the Investor Education and Protection Fund

12. Disclosure relating to Employee Benefits - As per revised AS - 15 Assumptions made for the actuarial valuation of Gratuity Liability

Payment of Gratuity arises on account of future payments which a company is required to make in the event of an employee retiring or dying during the services or leaving due to certain reasons.

Rate of interest

As the payments are to be made in future on the happenings of the contingencies, it is necessary to use an appropriate rate of interest for the purpose of ascertaining the present value of such payments. While considering the various aspects in this behalf, a long-term view is taken and a suitable rate in calculating the valuation function is adopted.

Salary scale

Since the salaries or wages of employees will increase year after year, it is necessary to have rough approximation of the salary an employee will be receiving at the time of payment of gratuity. A suitable growth rate is assumed for this purpose. This is implied in the projected Unit Credit Method.

Mortality

Since the gratuity payments are to be made on the death of an employee while in service or on attainment of retirement age, it is necessary to employ a Mortality Table so that the number of employees who would retire on the attainment age could be estimated. The table used in the calculation of valuation functions is recent Mortality Table.

13. As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation and rural development projects

14. The previous year's figures have been reclassified to conform to this year's classification. details of which are as follows.

15. The previous year's financial statements were audited by a firm of Chartered Accountants other than M/s B S R & Co. LLP

16. Information with regard to other matters, as required by Schedule III to the Act is either nil or not applicable to the Company for the year.


Mar 31, 2013

Note 1

BACKGROUND

Hikal Limited (''Hikal'' or ''the Company'') was incorporated as a public limited Company on July 8,1988 having its registered office at 717/718, Maker Chamber V, Nariman Point, Mumbai-400 021.

The Company is engaged in the manufacturing of various chemical intermediates, specialty chemicals, Active pharma ingredients and Contract Research activities.

The Company is operating in the crop protection and pharmaceuticals space.

As At As At March 31, 2013 March 31,2012

Note 2

Contingent liabilities

Bills discounted with banks 949.14 774.41

Guarantee provided to Bank for borrowing made by subsidiary - 250.73

Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) 92.54 152.65

Note 3

The company had entered into options & forward contracts to hedge its exposures to fluctuations in the past in foreign exchange. As the major percentage of the Company''s turnover is realised from exports hence the Company was of the opinion that the results of these transactions represent unrealized losses that are notional in nature. The gain/loss on these transactions was recoginsed as and when they fell due. The mark to market loss on March 31, 2013 on these option and forward contracts not recognized in statement of profit and loss amounts to f Nil (Previousyear as on March 31,2012 Rs.357.18 millions).

The Company has also entered into swap contracts against long term loans which will mature year on year upto August 2016. The Company is of the opinion that the "Mark to Market" loss of these transactions represent unrealized losses that are notional in nature. The gain/loss on these transactions will be recongised as and when they fall due. The mark to market loss on March 31,2013 on these swap contracts not recognized in statement of profit and loss amounts to Rs.116.17 millions (Previous year as on March 31,2012 Rs.95.46 millions)

Note 4

a) In terms of the Scheme of Arrangement ("the Scheme") under sections 391 to 394 read with Section 78,100 to 103 of the Companies Act, 1956 sanctioned by order dated March 30, 2012 of Hon''ble High Court of Judicature at Bombay and filed with the Registrar of Companies, Maharashtra on May 10, 2012, all the assets and liabilities of the research business of Acoris Research Limited (''Transferor Company'') has been taken over by the Company with effect from April 1, 2012, being the effective date. The details of assets and liabilities taken over by the Company is as follows:

b) In accordance with the said Scheme and as per the Hon''bie High Courts'' approval the assets and liabilities of Research business of the transferor company have been vested in the Company with effect from April 1, 2012 and have been recorded in accordance with the provisions of the Scheme as follows:

i) The Company has recorded all the assets and liabilities pertaining to the Transferor Company at the respective book values as appearing in the books of Transferor Company as on the appointed date.

ii) The excess of liabilities over assets of the Transferor Company aggregating Rs.134.56 millions have been transferred to Securities Premium Account of the Company.

iii) Further, the carrying value of the investment in the transferor company aggregating Rs.150.40 millions has been adjusted against Securities Premium Account of the Company.

c) In view of the aforesaid scheme, the profit and loss of the Research business is forming part of the current year profit and loss of the Company. Accordingly, the figure for the current year including EPS are strictly not comparable with those of the corresponding previous year.

Note 5

Capitalization of expenditure

During the year, the company has capitalized the following expenses of revenue nature to the cost of fixed asset/capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the company.

Note 6

Segment reporting

The Company''s financial reporting is organized into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information.

Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising debtors, inventories, fixed assets and loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising creditors and other liabilities.

The Company''s operating divisions are managed from India. The principal geographical areas in which the Company operates are India, Europe, USA&Canadaand South EastAsia.

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

Note 7

Related Party Disclosures List of related parties Parties where control exists :

Subsidiary Companies

Hikal International B.V. ("HIBV")

Acoris Research Limited (ARL)

Key Management Personnel

Jai Hiremath Chairman and Managing Director

SameerHiremath President & Joint Managing Director

Relatives of Key Management Personnel

Sugandha Jai Hiremath

Enterprises over which key management personnel and their relatives exercise significant influence

Decent Electronics Private Limited ("DEPL)

Marigold Investments Private Limited Iris Investments Private Limited

Karad Engineering Consultancy Private Limited (''''KECPL)

Ekdant Investment Private Limited ("EIPL)

Shri Rameshwara Investment Private Limited ("RIPL)

Shri Badrinath Investment Private Limited ("BIPL)

Rushabh Capital Services Private Limited ("RCSPL)

Note 8

Amount due from subsidiaries as at March 31, 2013:

- Hikal International B.V Rs.6.50 millions (Previous year Rs.4.39 millions) [Maximum amount outstanding during the yearRs.6.50 millions (PreviousyearRs.4.39 millions)]

- Acoris Research Limited Nil (PreviousyearRs.628.03 millions) [Maximum amount outstanding during the year Nil (PreviousyearRs.628.03 millions)]

Note 9

Dues relating to Investor Education and Protection Fund. There are no dues, which needs to be credited as at the year end to the Investor Education and Protection Fund.


Mar 31, 2012

Note 1

As At As At March 31, 2012 March 31, 2011

Contingent liabilities

Bills discounted with banks 774.41 815.45

Guarantee provided to DBS Bank for borrowing made by subsidiary 250.73 301.46

Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) 152.65 67.56

Note 2

a) From the year ended 31 March 2009 the Company had adopted principles of hedge accounting as set out in Accounting Standard 30 - "Financial Instruments Recognition and Measurement" issued by the Institute of Chartered Accountants of India to the extent that the adoption did not conflict with the existing mandatory accounting standards and other authoritative pronouncements of the Company Law and other regulatory requirements. With effect from April 1, 2011, the Company changed its method of accounting related to forward contracts and long term foreign currency monetary items by recognizing exchange difference in the profit and loss account in the period in which it arise in accordance with Accounting Standard 11 - The Effects of Changes in Foreign Exchange Rates. Had Company continued following principles of Accounting Standard 30, the profit before tax for the year ended March 31,2012 would have been higher by Rs.231.60 millions.

b) The Company has entered into forward/options contracts to hedge its exposure to fluctuations in foreign exchange for approx 30% of future exports. These contracts have been staggered over the next four years as the major percentage of the Company's turnover is realized from exports. The management is of the opinion that the mark to market losses of these transactions represents unrealized losses that are notional in nature and will not affect its ongoing business as the Company has requisite long term export orders to cover these contracts. The management is of the opinion that the fluctuation in currency movements against hedged contracts gets compensated by realization of a higher value of sales realizations and therefore, the actual profit/loss against such outstanding contracts crystallizes only on maturity of such contracts. The gain/ loss on these contracts will be recognized as and when they fall due. The mark to market valuation loss is at Rs.452.63 millions as at March 31,2012 (March 31,2011: Rs.295.28 millions).

c) The Honb'le High Court of Mumbai has approved the Scheme of Arrangement between Acoris Research Limited and Hikal Limited and their respective share holders and creditors on March 30,2012. As per sanctioned scheme, Research business of Acoris Research Limited will merge into Hikal Limited w.e.f April 1,2012.

Segment reporting

The Company's financial reporting is organized into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information.

Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising debtors, inventories, fixed assets and loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising creditors and other liabilities.

The Company's operating divisions are managed from India. The principal geographical areas in which the Company operates are India, Europe, USA & Canada and South East Asia.

Note 3

Amount due from subsidiaries as at March 31,2012:

- Hikal International B.V Rs.4.39 Million (Previous year Rs.4.39 Million) [Maximum amount outstanding during the year Rs.4.39 Million (Previous year Rs.4.39 Million)]

- Acoris Research Limited Rs.628.03 Million (Previous year Rs.468.92 Million) [Maximum amount outstanding during the year Rs.628.03 Million (Previous year Rs.468.92 Million)]

Note 4

Dues relating to Investor Education and Protection Fund

There are no dues, which needs to be credited as at the year end to the Investor Education and Protection Fund.

The financial statement for the year ended March 31, 2011 had been prepared as per the then applicable pre- revised Schedule VI to the Act. Consequent to the notification of Revised Schedule VI under the Act, the financial statement for the year ended March 31, 2012 are prepared as per the Revised Schedule-VI. Accordingly, the previous year's figures have been reclassified to conform to this year's classification. Also, certain disclosures as per the pre-revised Schedule VI but not required under Revised Schedule VI have not been made for the previous year. The adoption of Revised Schedule VI for previous year's figures does not impact recognition and measurement principals followed for preparation of financial statements.


Mar 31, 2011

1. Background

Hikal Limited ('Hikal' or 'the Company') was incorporated as a public limited Company on 08 July 1988 having its registered office at 717/718, Maker Chamber V, Nariman Point, Mumbai 21.

The Company is engaged in the manufacturing of various chemical intermediates, specialty chemicals, Active pharma ingredients and Contracts Research activities.

The Company is operating in the crop protection and pharmaceuticals space.

As At As At

March 31, March 31, 2011 2010 i) Contingent liabilities

Bills discounted with banks 815.45 526.80

Guarantee provided to DBS Bank for borrowing made by subsidiary 301.46 361.20

Estimated amount of contracts remaining to be executed 67.56 148.98 on capital accounts and not provided for (net of advances)

ii) In earlier years, the Company had issued 12,000, 0.5% Foreign Currency Convertible Bonds (FCCB) of USD 1,000 each aggregating to Rs. 541.80 million. These bonds were:

- Convertible at the option of the bondholder at any time on or after 21 November 2005 but prior to the close of business on 10 October 2010 at a fixed exchange rate of Rs 44.93 per 1 USD and price of Rs 745 per share of par value of Rs 10 per share subject to adjustment in certain events i.e. issue of bonus shares, division, consolidation, reclassification of shares etc.

- Redeemable in whole but not in part at the option of the Company on or after 21 October 2008 and up and until seventh business day prior to 21 October 2010 if closing price of the Share is greater than 160 percent of the conversion price for a continuous period of 60 consecutive stock exchange trading days.

- Redeemable on maturity date on 21 October 2010 at 132.56% of its principal amount if not redeemed or converted earlier.

During the year, the Company has redeemed these bonds along with premium. Premium paid has been adjusted against securities premium account.

iii) a) From the year ended 31 March 2009 the Company has adopted principles of hedge accounting as set out in Accounting Standard 30 "Financial Instruments Recognition and Measurement" issued by the Institute of Chartered Accountants of India to the extent that the adoption did not conflict with the existing mandatory accounting standards and other authoritative pronouncements of the Company Law and other regulatory requirements. Accordingly, in respect of foreign currency loans/forward contracts which qualify for hedge accounting, gain of Rs 95.95 million on revaluation of such loans as at 31 March 2010 had been recognized in Cash flow hedge reserve and same has been reversed during the year .The company has also recognized a gain of Rs 37.10 million to be ultimately recognized in Profit and Loss account when the hedged highly probable forecast revenue impacts profit or loss.

b) The Company has entered into forward/options contracts to hedge its exposure to fluctuations in foreign exchange for approx 30% of future exports. These contracts have been staggered over four years as the major percentage of the Company's turnover is realized from exports. The management is of the opinion that the mark to market losses of these transactions represents unrealized losses that are notional in nature and will not affect its ongoing business as the Company has requisite long term export orders to cover these contracts. The management is of the opinion that the fluctuation in currency movements against hedged contracts gets compensated by realization of a higher value of sales realizations and therefore, the actual profit/loss against such outstanding contracts crystallizes only on maturity of such contracts. The gain/ loss on these contracts will be recognized as and when they fall due. The mark to market valuation loss is at Rs 295.28 million as at 31 March 2011 (2010:Rs. 458.80 million).

v) Segment reporting

The Company's financial reporting is organized into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising debtors, inventories, fixed assets and loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising creditors and other liabilities.

The Company's operating divisions are managed from India. The principal geographical areas in which the Company operates are India, Europe, USA & Canada and South East Asia.

vi) Related Party Disclosures

List of related parties

Subsidiary Companies

Hikal International B.V. ("HIBV")

Acoris Research Limited ("ARL")

Key Management Personnel

Jai Hiremath Vice Chairman and Managing Director

Sameer Hiremath Deputy Managing Director

Relatives of Key Management Personnel

Sugandha Jai Hiremath

Enterprises over which key management personnel and their relatives exercise significant influence

Decent Electronics Private Limited ("DEPL") Marigold Investments Private Limited Iris Investments Private Limited Karad Engineering Consultancy Private limited ("KECPL") Ekdant Investments Private limited ("EIPL") Rameshwar Investment Private Limited ("RIPL') Badrinath Investment Private Limited ("BIPL") Rushabh Capital Services Private Limited ("RCSPL")

xiii) Amount due from subsidiaries as at March 31, 2011 - Hikal International B.V Rs. 4.39 million (Previous year Rs. 4.36 Million) [Maximum amount outstanding during the year Rs. 4.39 Million (Previous year Rs. 4.36 Million) - Acoris Research Limited Rs 468.92 Million (Previous year Rs 291.80 Million) [Maximum amount outstanding during the year Rs 468.92 Million (Previous year Rs 291.80 Million)]


Mar 31, 2010

1 Background

Hikal Limited (Hikal or the Company1) was incorporated as a public limited Company on 08 July 1988 having its registered office at 717/718, Maker Chamber V, Nariman Point, Mumbai 21.

The Company is engaged in the manufacturing of various chemical intermediates, specialty chemicals, Active pharma ingredients and Contracts Research activities.

The Company is operating in the crop protection and pharmaceuticals space.

2. As At As At March 31, 2010 March 31, 2009

i). Contingent liabilities

Bills discounted with banks 526.80 544.97

Guarantee provided to DBS Bank for borrowing made by subsidiary 361.20 407.68

Estimated amount of contracts remaining to be executed 148.98 133.34 on capital accounts and not provided for (net of advances)

Premium till date on redemption of 12,000 0.5%

Foreign Currency Convertible Bonds of USD 1,000 each (Refer note no. 21 (ii) below) - 137.21

ii. 12,000 (Previous year 12,000) 0.5% Foreign Currency Convertible Bonds (FCCB) of USD 1,000 each aggregating to Rs 541.80 million (Previous year Rs 611.52 Million). These bonds are:

- Convertible at the option of the bondholder at any time on or after 21 November 2005 but prior to the close of business on 10 October 2010 at a fixed exchange rate of Rs 44.93 per 1 USD and price of Rs 745 per share of par value of Rs 10 per share subject to adjustment in certain events i.e. issue of bonus shares, division, consolidation, reclassification of shares etc.

- Redeemable in whole but not in part at the option of the Company on or after 21 October 2008 and up and until seventh business day prior to 21 October 2010 if closing price of the Share is greater than 160 percent of the conversion price for a continuous period of 60 consecutive stock exchange trading days. Redeemable on maturity date on 21 October 2010 at 132.56% of its principal amount if not redeemed or converted earlier.

During the year ended 31 March 2010 there has been no conversion of bonds into shares.

The Company has made the requisite provision for the premium payable on these Bonds of Rs 156.98 million (31 March 2009: Rs Nil) and has been adjusted against securities premium account.

iii. a) During the previous year ended 31 March 2009 the Company has adopted the principles of hedge accounting as set out in Accounting Standard 30 - "Financial Instruments Recognition and Measurement" issued by the Institute of Chartered Accountants of India to the extent that the adoption did not conflict with the existing mandatory accounting stand ards and other authoritative pronouncements of the Company Law and other regulatory requirements. Accordingly, in respect of foreign currency loans which qualify for hedge accounting, losses of Rs 283.55 million on revaluation of such loans as at 31 March 2009 had been recognized in Cash flow hedge reserve and the same has been reversed during the year The company has also recognized a gain of Rs 95.95 million to be ultimately recognized in Profit and Loss account when the hedged highly probable forecast revenue impacts profit or loss.

b) The Company has entered into forward/options contracts to hedge its exposure to fluctuations in foreign exchange for approx 30% of future exports. These contracts have been staggered over the next four years as the major percentage of the Companys turnover is realized from exports. The management is of the opinion that the mark to market losses of these transactions represents unrealized losses that are notional in nature and will not affect its ongoing business as the Company has requisite long term export orders to cover these contracts. The management is of the opinion that the fluctuation in currency movements against hedged contracts gets compensated by realization of a higher value of sales realizations and therefore, the actual profit/loss against such outstanding contracts crystallizes only on maturity of such contracts. The gain/ loss on these contracts will be recognized as and when they fall due. The mark to market valuation loss is at Rs 458.78 million as at 31 March 2010(31 March 2009: Rs 1,498.57 million).

iv Segment reporting

The Companys financial reporting is organized into two major operating divisions viz. crop protection and pharmaceuticals. These divisions are the basis on which the Company is reporting its primary segment information

Joint revenues and expenses, if any, are allocated to the business segments on a reasonable basis. All other segment revenues and expenses are directly attributable to the segments.

Segment assets include all operating assets used by a segment comprising debtors, inventories, fixed assets and loans and advances. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities of the segment comprising creditors and other liabilities.

The Companys operating divisions are managed from India. The principal geographical areas in which the Company operates are India, Europe, USA & Canada and South East Asia.

v. Related Party Disclosures

List of related parties Entities where control exists

Hikal International B.V. ("HIBV") Acoris Research Limited ("ARL")

Key Management Personnel

Jai Hiremath Vice Chairman and Managing Director

Sameer Hiremath Deputy Managing Diector

Relatives of Key Management Personnel

Sugandha Jai Hiremath

Enterprises over which key management personnel and their relatives exercise significant influence

Decent Electronics Private Limited

Marigold Investments Private Limited

Iris Investments Private Limited

Karad Engineering Consultancy Private limited

Ekdant Investments Private limited

Rameshwar Investment Private Limited ("RIPL")

Badrinath Investment Private Limited ("BIPL")

vi Amount due from subsidiaries as at March 31,2010:

- Hikal International B.VRs 4.36 million (Previous year Rs Nil) [Maximum amount outstanding during the year Rs 4.36 Million (Previous year Rs 244.64 Million)]

- Acoris Research Limited Rs 291.80 Million (Previous year Rs 115.78 Million) [Maximum amount outstanding during theyear Rs 291.80 Million (Previousyear Rs 136.87 Million)]

- Marsing & Co Limited A/S Rs 81.40 Million (Previous year Rs 108.68 Million) [Maximum amount outstanding during the year Rs 108.68 Million (Previous year Rs 108.68 Million)]

vii. There are no dues, which needs to be credited as at the year end to the Investor Education and Protection Fund.

viii. Figures in italics are for the previous year. Figures for the previous year have been regrouped where necessary to conform to current years classification. xxi. The figures of previous year ended 31 March 2009 were audited by another firm of Chartered Accountants.

 
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